Should scandal-plagued Obama follow 'Rumsfeld's Rules'?

This is a rush transcript from "On the Record," May 16, 2013. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Former secretary of defense Donald Rumsfeld says the Obama administration is facing the perfect storm. Earlier tonight we spoke with Secretary Rumsfeld about all the latest scandals, his advice for the president, and his brand new book "Rumsfeld Rules."

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VAN SUSTEREN: Mr. Secretary, nice to see you, sir.

DONALD RUMSFELD, FORMER SECRETARY OF DEFENSE: Thank you.

VAN SUSTEREN: You have a brand new book, "Rumsfeld Rules." In fact you told me about it the last time I spoke to you that it was coming out.

RUMSFELD: It's been fun. I enjoyed doing it. I started collecting those rules as a youngster and I have been doing it for just under 80 years.

VAN SUSTEREN: In looking at the rules, I'm thinking in light of what's going on for the present we have the AP scandal, we have Benghazi we have the IRS. What rule do you think that people should take a look at in your book? What would be a good rule for him?

RUMSFELD: When I was a Navy pilot I was getting trained in a little airplane, a prop plane called an SMJ. And the manual said if you are lost what you do is climb, get altitude, conserve, save your fuel, clean it out, and confess. Get on the radio and say "I need help." That's what the White House needs to do. They have the perfect storm going on.

You know, I was chief of staff for President Ford right after the Nixon resignation, and the reservoir of trust had been drained. That's what this administration is going to have to watch out for, because you do lead through persuasion and you can't persuade if people aren't trusting. And if incrementally the trust goes because of this or that or someone speaks too soon or they say something that turns out not to be ground fact, ground truth, why, it is cumulative. It can be a problem.

VAN SUSTEREN: It's odd. It sort of all happened at once. They say things happen in threes, but all of a sudden it's like the president woke up one day and all three problems were there in front of him.

RUMSFELD: The other, of course, Washington rule is that the cover-up is always worse than the event, and the second rule is no one remembers the first rule. So if someone says something that turns out not to be so, people then think it's a cover-up, and they use the word "cover-up." And the trust factor is so important for a political leader.

VAN SUSTEREN: You used the term "cover-up." Let's go back to Benghazi. Do you suspect that that sort of a cover-up, not the sort of time leading up to whether or not we should have had more security. I think everyone agrees we should have had more security at Benghazi. And we had the heat of the moment when the Benghazi facility is under attack. Then we have what happened afterwards with the video and the statements by ambassador rice. Was that a cover-up?

RUMSFELD: I don't know how you can call it anything else. I say that because if the president then goes to the U.N. and talks to people about a YouTube video as being part of the problem or the problem, and if Mrs. Clinton goes to the families of the people who were killed and says we are going to get the person who did that YouTube video, days, many days after everyone who had anything to do with it knew that these people were well- armed, that there had been warnings about attacks, that the British had pulled their people out, and that it was certainly -- they were so well- armed it could not be a spontaneous demonstration.

I don't know what else anyone can call it other than hope prevailing over truth. I mean, I think they really wanted to support the narrative that was out there that the problem with terrorism was down, that Usama bin Laden was dead, and they don't want to talk about it for some reason.

I don't see how you can win anything like the Cold War, and the problem against terrorists is much more like the Cold War than it is like World War I or World War II or Korea. We have got to complete ideologically against the people who are funding and recruiting and training people to go out and kill innocent men, women, and children. And if you are unwilling to identify them and call exactly what it is, a radical Islam, and knock the whole of religion, and that's what people are worried about, they are afraid they will see it against religion.

VAN SUSTEREN: To what end, though, would the administration not want to acknowledge the fact that there is terrorism out there? I mean, is it a political issue? I actually think it's not a political issue but I may be dead wrong on that. I think the American people know the world is dangerous. But to what end would they even want to cover it up?

RUMSFELD: The only thing I can think is during the campaign he was campaigning on the basis they had done a great job against terrorism and that Usama bin Laden was dead and terrorism was town. Why else would you call what happened at Fort Hood workplace violence when it was clearly a person who was killing because he believed that that was what he should do? He was guided by a radical theology.

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VAN SUSTEREN: Coming up, much more with former defense secretary Donald Rumsfeld. Of the three scandals rocking the White House, which does he say strikes the most fear in Americans? Secretary Rumsfeld answers that question next. ON THE RECORD is back in two minutes.

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VAN SUSTEREN: Now more with former secretary of defense Donald Rumsfeld.

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VAN SUSTEREN: The IRS scandal, do you think we are consumed with this just the next few days and it will blow, or is this a bigger cancer for the administration?

RUMSFELD: I guess only time will tell. But of the three problems, I think this one strikes so much at what America isn't and what Americans don't want and what Americans would fear, a government that is well-funded and well-staffed that turns against them. That is something that's so fundamentally wrong. I think that it is a big, big issue.

VAN SUSTEREN: Big, big issue for all of us, but is it a big, big issue for the president? It's a big bureaucracy and is there any way you see he has any sort of responsibility for it other than the buck stops here on the president?

RUMSFELD: Sure he has a responsibility for it. I mean, what a leader does is when something like that happens, he -- the person he fired, quote, unquote, was leaving in a month. And he submitted his resignation early. But when you -- first of all, those people obviously did what they did believing that it was -- the administration was comfortable with it.

VAN SUSTEREN: You don't think it was just some rogue people being obnoxious and stepping on people's rights and being awful? You think that this is part of a culture?

RUMSFELD: Who knows, but clearly they thought it was OK. And it isn't OK. It's not only not OK, it really strikes at everything that Americans don't want, a government that turns against them. We will see, but if things keep popping up around the country, this person will go on television and say now that I see what's happening, I understand what happened to me. And they will have a report that they tried to do it.

I heard a man who made a contribution to Romney who was called in and ended up spending $60,000 for lawyers trying to defend himself against the IRS. And he hadn't done anything wrong. And harassment by government is something we understand happens in other countries.

It used to happen here, I mean, in cities more and some states. But it is a terrible, terrible thing and so fundamentally what we believe in. We will see how many people, how many organizations will pop up and say, well, I thought maybe everybody had to wait a year to get approved. And they will pop up and we will see them on television, we will see them in newspapers, and we'll know the extent to which this was a problem.

My understanding was that it wasn't just some local fellow in Ohio, that that office was the office that had the lead responsibility for managing and approving or disapproving all of the requests in that particular category.

VAN SUSTEREN: If I were investigating, I would compare to see how the other side of the political spectrum were treated. Did they get jerked around as much? Did they have to wait along? I think that's very telling, very telling.

RUMSFELD: Yes.

VAN SUSTEREN: The president's response, you brought that up.

RUMSFELD: One other thing before you go on. I think that it may have a ripple effect on ObamaCare, because ObamaCare is to be monitored and managed by that same organization, the Internal Revenue Service. And people are frightened of the certainly revenue service because of the intrusiveness they gain of a life, because of what they are doing with their money and how they do it.

VAN SUSTEREN: So what's going to help?

RUMSFELD: I don't know. I think what will happen is if that was going on, it's possible that more was going on and it will pop up over a period, and it will come out over a period of time. And people will say I now understand what happened to me. And to the extent that happens, it won't go away probably.

VAN SUSTEREN: What happens to ObamaCare, anything since its being administered by the IRS?

RUMSFELD: I think so. I cannot imagine that people will want that organization, the IRS, to be the deciding institution that would look at healthcare and your healthcare circumstantial and how you spend your healthcare dollars and what's the nature you are of your insurance and what you are spending those dollars on. I just can't imagine that there won't be some change in that.

VAN SUSTEREN: We turn to the AP. Obviously national security and important issues about leaks, but now the controversy over the breadth and the secrecy of the seizure. Your thoughts about it?

RUMSFELD: When I her the attorney general say he's been in and out of this business for a decade or two, and that in his judgment this ranked one, two, or three in the most serious breach of security he's ever seen, I said to myself, I don't know. I don't know what I think about it.

It's conceivable to me that there could be something that would be so serious that the government might do something. Now, what might they have done? One way to do it is to go to the leadership in Congress and sit down. That's been done before on very important matters.

Another way to do it would be to go to a FISA court, I suppose, and see if they have the ability to look at something or to take a group of congressional leaders together, and say here's something, we are going to have to do something we don't want to do. I've been in the executive branch for an awful lot of years and I've never seen anything like that.

VAN SUSTEREN: The CEO, or the president issued a statement and he mentioned when the AP first had the story they consult the administration and they held the story until it seemed to me to be some sort of agreement that the danger had passed.

RUMSFELD: I didn't know that.

VAN SUSTEREN: That's what the last paragraph. So that's the sort of curious thing is sort of the give and take that I don't understand with the administration. It seemed like they were talking.

RUMSFELD: And if the AP had it, they had it. It's not like it's going to disappear. And they already knew what was in it. So I just don't know. I want to let the grass grow on that one a little bit and see what I think about it. But one of my rules in the book is if you don't know, it's perfectly all right to say you don't know.

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